Accounting for Social Value in Nonprofits and For-Profits.pdf

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AccountingforSocialValueinNonprofitsandFor-ProfitsJackQuarter,BettyJane(B.J.)RichmondTheauthorsarguethatsocialvaluecanserveasabridgebetweenthenonprofitandfor-profitsectors.Theyfurtherpro-posethatsocialvalueisnotsimplyanabstractconceptbutcanbemeasuredbyapplyingsocialaccountingmethods.Theauthorsarguethatnonprofitsarefoundedonasocialmissionbutthattraditionalaccountingapproachesdonotproperlyassesstheirsocialproducts.Theyillustratethecentralityofsocialvalue,bothtononprofitsandfor-profits,intwoways:(1)adiscussionoffor-profitfirmsthatbehavemuchlikenonprofitsand(2)anapplicationofthesocialaccountingmodel.Theauthorsdiscusstwotypesoffirms:(1)for-profitswhosesharesareheldinatrustandthereforeoperatemuchlikecorporationswithoutshare-holdersorlikenonprofitsand(2)for-profitswhoseownersdonotexercisetherightsassociatedwiththeirproperty.Theythenapplyasocialaccountingmodeltononprofitemploymenttrain-ingprogramstoillustratehowtheinclusionofsocialvariableschangestheassessmentofanorganization’svalue.Theyconcludewithadiscussionofasocialaccountabilityframeworkthatembracesbothnonprofitsandfor-profits.EARGUEinthisarticlethattheconceptofsocialvaluecanWbeusedasabridgebetweenthenonprofitandfor-profitsectors;wefurtherproposethatsocialvalueisnotsimplyanabstractconceptbutcanbemeasuredbyapplyingsocialaccount-ingmethods.Thecaseforsocialvalueamongnonprofitsisnotcontroversial;nonprofitsareorganizedaroundasocialmission,whichsomewouldargueistheirdefiningcriterion.Byoperationalizingtheirmission,nonprofitsgenerateservicesthathavevaryingdegreesofsocialvalue.Thisiswidelyrecognizedinsociety,thoughmeasuringthesocialvalueofnonprofitservicesinaformalwayisanuncommonpractice.Itisalsopossibleforfor-profitfirmstohaveasocialmissionthatguidestheirprovisionofservice,thoughasarulethisisnotempha-sizedtosuchagreatextentasfornonprofits.TheBodyShop(Roddick,1991)andBen&Jerry’s(Lager,1994)aretwoexamplesoffor-profitfirmsthatemphasizetheirsocialmission—perhapsevenmorestronglythantheaveragenonprofit.ThesefirmsviewNONPROFITMANAGEMENT&LEADERSHIP,vol.12,no.1,Fall2001©JohnWiley&Sons,Inc.75 76QUARTER,RICHMONDthemselvesasthevanguardofamovementforsociallyresponsiblebusinesses(Scott,1995).Eventhoughsuchfirmsarenottypicaloftheprivatesector,theyareworthnotingbecausetheyunderlinethepointthatnonprofitsdonothaveamonopolyonsocialvalue,whichshouldbeviewedasacontinuousvariablethatisapplicabletobothnonprofitsandfor-profitsandismeasurablethroughsocialaccount-ingpractices.Toadegree,theemphasisonsocialvaluebynonprofitsisrelatedtotheiruniqueownershiparrangements,thatis,theyareorganiza-tionswithoutshareholders.ThereforethereareconstraintsontheThecasefordistributionofsurplusearnings(Hirshhorn,1995)andalsoontheappropriationofthenetvalueofthefirm(Quarter,1992).Forsocialvaluewantofabetterlabel,werefertotheseconstraintsasthesocialprop-amongnonprofitsertyprincipleofnonprofits.Inessence,nonprofitsareaformofsocialisnotproperty,incontrasttofor-profitfirmsthatarethepropertyofeithershareholders,partners,orsoleproprietors.Assuch,nonprofitsarecontroversial;morelikelythanfor-profitstobasetheirraisond’êtreonthesocialnonprofitsarevalueoftheirservices.organizedaroundHowever,asweshowinthisarticle,variationsofownershiparrangementsintheprivatesectorblurthedistinctionbetweenfor-asocialmission,profitandnonprofitfirms.Firstwediscusstwodistinctions:(1)firmswhichsomethatareownedthroughatrustand(2)firmsthatareprivatelyownedwouldargueisbuttheownerdoesnotpartakeofthepropertyrightsassociatedwithprivateownershipbecauseofcommitmenttoasocialmissionthatistheirdefiningtheoverridingpurposeofthefirm.Theseexamplesaretakenpri-criterionmarilyfromBeyondtheBottomLine:SociallyInnovativeBusinessOwn-ers(Quarter,2000).Followingthatisadiscussionoftheapplicationofsocialaccountingpracticestoboththenonprofitandfor-profitsectors.CompaniesOwnedThroughaTrustNotmanyfirmsareownedthroughatrust,butsomesurprisinglylargeonessuchasBosch,Zeiss,andtheJohnLewisPartnershipare.Thelastfirmmentionedisoneofthemostsuccessfulretailingbusi-nessesinBritain,andweuseitastheprimaryexample.In1995,itsnetworkofdepartmentstoresanditsWaitrosesupermarketchain,togetherwithsomesmallersubsidiaries,employed41,100peopleandyieldedabout$6billioninrevenues.Thecompanywasstartedin1864inLondonbyJohnLewis,amerchantwholikedtobeknownasJohnLewisofOxfordStreet.HissonSpedan(JohnSpedanLewis)enteredthebusinessatagenineteen.Hebecameapartnertwoyearslater(in1906)andstartedaprocessofsocialinnovationthattrans-formedJohnLewisintoauniquecorporation.SpedanLewis’smis-sionwassparkedbytherealizationthathe,hisfather,andhisyoungerbrotherOswaldweredrawingmorefromthebusinessthanthethreehundredemployees.“Toomuchforthree—toolittlefor300,”washissuccinctsummaryoftheproblem(Lewis,1948,p.7). ACCOUNTINGFORSOCIALVALUEINNONPROFITSANDFOR-PROFITS77Hewroteonanotheroccasion:Thereontheonesidewasmyfatherandtheothersidehisstaff—myfatherwithoverahundredseparatepiecesofpropertythatheneversawandthatwerenothingbutabothertohim...thestaffwithanemploymentthatwasextremelyinsecureandthatgavethemalivingsomeagerthattheywerefarlesshappythantheycouldhavebeen[p.18].Andanothertimehewrote:Toadegree,theAsIturnedthesethingsoverinmymind,itoccurredtomeemphasisonthat,ifaverymuchlargerproportionoftheincomefromthebusinesshadgonetotheotherpeoplewhowerelikewisesocialvaluebygivingtheirownworkinglivestoit,thebusinessitselfwouldnonprofitsishavebeenvastlymoreefficientandmyfather’sliferelatedtotheirwouldhavebeenreallyfarhappier[p.16].uniqueownershipThisrealization,whichSpedanLewisreferstoinhisbooksPart-arrangements,nershipforAll(1948)andFairerShares(1954),becameacatalystforthatis,theyarethepioneeringinnovationsthathebroughttothecompany—innovationsthatbecamehislife’swork.Muchofthethinkingthatorganizationsledtotheseboldinnovationsoccurredduringatwo-yearrecupera-withouttiveperiodfromtwomajoroperationsfollowingaseriousridingacci-shareholdersdentin1909.Thecornerstoneoftheinnovationsweretwoirrevocablesettlementsoftrust:thefirstin1929,ayearfollowingthedeathofhisfather,whomLewisfearedwouldhaveopposedthearrangementhadhefoundoutaboutit,andthesecondin1950,whenLewisatagesixty-fivefinalizedthearrangementthathehadcreatedinthefirstsettlement.Althoughthesettlementswerecomplex,Lewisessentiallymadeagiftofhispropertyinthecompany(estimatedconservativelyatabout£1millionin1929)toatrust(theJohnLewisPartnershipTrustLimited)thatwassetupforthispurpose.ThetrustservesasaholdingcompanyfortheJohnLewisPartnershipPLC(publiclim-itedcompany)throughwhichthebusinessoperates.Lewissubse-quentlydonatedhisownpersonalestatetothepartnershipaswell.Byplacinghispropertyinthetrust,Lewiswantedtoseetheworkersinthecompanybecomethebeneficiariesofitsprofits.Allworkersonpermanentcontract(includingpart-timestaff)becamepartners(35,000ofthe41,100staff).Aspartners,theybecamethebeneficiariesofthestockheldinthetrustandthere-foretherecipientsofthecompany’sdividends.Inotherwords,throughbeingthebeneficiariesofthetrust,thepartnersassumedtherighttothenetincomeofthecompanythatnormallygoestoshare-holders.Moreover,throughthisapproachLewiswasabletoneutral-izethepotentialinfluencethattheholdersofvotingsharesnormally 78QUARTER,RICHMONDhavewithinacorporation.Bylockingthevotingstockintothetrustandbysurrenderinghiscontrolofit(ashedidin1950),Lewiswas,ineffect,creatingacompanythathadnoshareholdersandwasthere-foremuchlikeanonprofitexceptthattheoperatingfirmfunctionedinthemarketmuchlikeanyothercommercialenterprise.Inaddition,Lewispreparedanelaborategovernancethatallowedemployeestoelectrepresentativestoagoverningcouncilandtopar-ticipateinvariousdecision-makingcommittees.Hesoughttofindabalancebetweenmanagement’srighttomanageandemployeeinvolvementindecisionmaking.ThemodelthatLewiscreatedwasnotunique.In1888,asimi-larmodelwascreatedinJena,Germany,atCarlZeiss—anopticalfirm.FollowingZeiss’sdeath,hispartnerErnstAbbeboughtupallByplacinghisoftheoutstandingsharesinthefirmanddonatedthemtoatrustpropertyinthethatbecametheholdingcompany(OakeshottandSchmid,1990;Volkmann,1966).Zeisshasevolvedintoagiantmultinationalundertrust,Lewisthisarrangement.wantedtoseetheSimilarly,in1923JamesEagan,adevoutPresbyterianinworkersintheBirmingham,Alabama,whowasinfluencedbythesocialgospel,transferredhisownershipoftheAmericanCastIronPipeCompanycompanybecomeintoatrustoutofconcernforthewelfareofhisemployees,mostofthebeneficiarieswhomwerepoorblacks(Cleghorn,1995).ofitsprofitsHowever,Lewisdifferedfromtheseothersinthathenotonlysoughttoinnovateinthefirmthatheownedbutalsotocreateamodelthatotherswouldfollow.Heviewedthepartnershipasrepre-sentinga“freshpath”thatwouldrejuvenateBritishindustry(Lewis,1954,p.12).Buthealsorecognizedthatthemarketandoverallcul-tureofcapitalismplacedconstraintsonanybusinessinnovation,includinghisown.OtherBritishfirmshavefollowedapathsimilartoLewis’s:theScottBaderCommonwealth,theBaxiPartnership,AirFlow,andtheJohnOldridPartnership.Butasheapproachedtheendofhislife,LewisrealizedthatthemainstreamofBritishindustrywasoblivioustothemodelthathehadcreated,andhediedbitterlydisappointed.PrivateFirmsThatBehavelikeNonprofitsTheprimaryexamplewecitehereisaseriesoffirmsestablishedbyaLeavenworth(Kansas)businessmanFredBraunJr.,whohasbecomealeaderininmaterehabilitation.Braunwasamillionairedoingbusi-nessturnaroundswhenhebecameinterestedininmatereform.Braunwasadevoutlyreligiousmanwho,bythetimehereachedforty,wassearchingforasocialmissiontowhichhecouldchannelhisenergies.Theopportunitycamethroughhisworkonagovernor’staskforceonprisonreform,whichallowedhimtoobservethatinmatesspentmuchoftheirdaywatchingtelevisionandthattheylackedaconstructiveworkprogramtopreparethemforareturntosociety. ACCOUNTINGFORSOCIALVALUEINNONPROFITSANDFOR-PROFITS79Braunconceivedofaplanwherebyinmateswouldworkinbusi-nessesoutsideofprison,developskillsthatcouldbeusedingainingemployment,earnatleasttheminimumwage,andbeforcedtosaveaportionoftheirearningssothattheywouldhaveanesteggwhentheywerereleased.Braun’splantohaveinmatesworkoutsidetheprisonmanufacturinghardgoodspresentedsecurityconcernsforofficials.Initially,heexperimentedwithoperatingabusinessinside,buttheincompatibilityofbusinessroutinesandtheprisonculturewithawardeninchargeprovedtooextreme;heconcludedthatitwouldbebettertooperateoutside.Usinghisownmoney,Braunpurchasedthreebusinessesthatwereinfinancialdifficultyandusedhisskillsasaturnaroundspe-cialisttomakethemprofitable.Between1979,whenhestartedthefirstinmatebusiness,and1995,fivehundredinmatesworkedintheseenterprises.Asaresultofthepublicitysurroundingtheseenter-prises,Braunhasbeenabletobuildupanetworkofcontactstohelphisparolees(towhomhejokinglyrefersashis“successfulalumni”)tobecomeemployed.Notalloftheparoleessucceedontheoutside;therecidivismrateisabout30percent.ButBraunisconvincedthathisalumnifaremuchbetterthantheinmateswhoareparoledwith-outsavingsandwithoutthetrainingtosucceedinthelabormarket.Someofthelong-terminmateswhohaveworkedwithBraunhavestartedoutwithsavingsofmorethan$20,000whentheyleaveprison.Healsotakesprideinthecontributionsoftheinmatestosociety,notingthatby1995thoseworkingatthethreecompanies(Zephyr,Heatron,andHenke)hadpaid$2.6millionintaxes,inroomandboard,andinrestitutioncosts.AsBraunmadecompaniesprofitable,hetransferredhisportionofanyincreaseintheequitytoapublicfoundation(theWorkmanFund)forinvestmentinotherbusinessestoprovidetrainingandemploymentforinmates.Thefund’spromotionalliteraturerefersto“VentureCapitalforRealWorldInmateWorkPrograms.”Braun’sobjectiveisnotsimplytoprovidegainfulemploymenttoinmateswithinthethreefirmshesetupinLeavenworthbutmainlytousetheWorkmanFundtoencourageprivatesectoremployersacrosstheUnitedStatestobecomeinvolvedintheemploymentandtrainingofinmates.Thusfar,theWorkmanFundhasinvestedinthreebusinessesthatemployinmatesaccordingtothestandardsthatBraunoutlines.Inthecomingyears,Braunintendstofocushisener-giesontheWorkmanFund,whichhehopeswillhavea$10millionloanportfolio.Otherprivatesectorbusinesspeoplehaveastrongsocialmis-sion:theaforementionedTheBodyShop;Ben&Jerry’s;theGermanfirm,Wilkhahn,thatdistinguisheditselfintheenvironmentalfield;theDutchfirm,EndenburgElectric,thathaspromotedanemployeeparticipationmodelcalledsociocracy;andtheNewZealandfirm,KTFootwear,thathasdistinguisheditselfinbuildingitsworkforcefromthemostmarginalizedmembersofsociety.Invaryingdegrees,these 80QUARTER,RICHMONDandotherfirmsshareBraun’scommitmenttosocialjustice,andinvaryingdegreestheownersdonotexercisetheircompletepropri-etaryrights.InBraun’scase,heispaidasalaryforhiswork,butanyprofitandappreciationinhisinvestmentistransferredtothefoun-dation;inotherwords,heoperateswithintheconstraintsofthenon-profitsector.ReevaluatingtheDifferenceAlthoughthepreviousdiscussionisaboutfor-profitfirms,thesefirmshaveemphasizedtheirsocialmissionandhavealsoputitintoprac-tice.Otherthanpossessingshares,thesefirmshavethedistinguish-ingcharacteristicsofnonprofits;mostimportantistheuseoftheirassetstogeneratesocialvalue.Theseexampleshavethegreatestsim-ilaritytoentrepreneurialnonprofits(Dees,1998),thatis,nonprofitsderivingtheirrevenueslargelyfromthemarket.Fewwouldarguethatsuchfirmshavenotgeneratedsocialvalue,buttheiraccountingpracticeswouldnotfocusonsuchvariables.Wenowaddressthatissuebydescribingtheworkonsocialaccountingasitisappliedtononprofitsaswellasfor-profits(Cherny,Gordon,andHerson,1992).Thereisalreadyanestablishedpracticereferredtoassocialauditthatnonprofits,cooperatives,andsomefor-profitsusetoassessthesocialimpactofanorganization(TheBodyShop,1996;MetroCreditUnion,1997).Asocialauditattemptstoassesssocialvalue,butitseparatessocialandfinancialindicatorsandviewsasocialassessmentasseparatefromthefinancialstatements.However,amodeldevel-opedbyRichmond(1999)combinesfinancialandsocialanalysisandthereforemightbemoreproperlylabeledsocialaccounting—atermthatothershaveusedaswell(Zadek,Pruzan,andEvans,1977).ThemodelwasdevelopedforusebyawiderangeoforganizationsbutwasfirsttestedonnonprofitsinOntario.SocialAccountingTheSocialAccountingFrameworkProjectwasinitiatedin1996andfundedbytheLondon,Ontario,officeoftheHumanResourcesDevelopmentCanada(HRDC)—thefederalgovernmentdepartmentresponsibleforemploymentpolicyandprograms.Theproject’ssteer-ingcommitteewasmadeupofrepresentativesfromthreelevelsofgovernmentandcommunity-basednonprofits.Itspurposewastoshedlightontheneedforsocialaccountabilityframeworksandtoolsfornonprofitorganizations.Theprojectconductedsocialanalysesonfivenonprofitcommunity-basedtrainingprojectsthatwerepro-vidingvocationaltrainingacrossOntario.Atthetime,CanadianjobtrainingpolicyandprogramswerebeingshiftedfromHRDCtotheprovinces.Concernshadbeenraisedthatcommunity-basedvoca-tionaltrainingwasexpensiveandthatitsfuturewastherefore ACCOUNTINGFORSOCIALVALUEINNONPROFITSANDFOR-PROFITS81unclear.Thisassessmentwasduetotheapplicationoftraditionalaccountingmethodsthatexcludedsocialimpact.However,asweillustratehere,whenasocialaccountingmethodologywasapplied,adifferentpictureemerged.Community-basedtrainingprojectsareidealforillustratingtheeconomicvaluethatnonprofitscreatebecausetheyprovideemployment-relatedtrainingtopeopleclassifiedas“severelyemploy-ment-disadvantaged.”Community-basedtrainingprojectsareoftenmoreexpensivethantraditionalvocationaltrainingbecause,inaddi-tiontoskillstraining,theyprovideon-sitecounselingandextrasup-portstoassisttraineesinovercomingmanypersonalandsystemicbarrierstoemployment(Rans,1989).Nevertheless,iftheprojectiseffective,ithelpstotransferpeoplefromaroleinwhichtheydrawassistancefromgovernmenttooneofbeinggainfullyemployedandpayingtaxes.Thesebenefitsareignoredintraditionalaccountingprocesses,sowhenthesocialaccountingprojectwasinitiated,therewasaneedtoaccountforthebenefitsofcommunity-basedtraininginrelationtoitscosts;giventhelackofmethodology,experimenta-tionwasrequired.Ateachofthefivesites,thequestionwasasked,“Howandtowhatextentdidthisorganizationparticipateinthesocialeconomyofitscommunityduringthesocialaudityear?”Thesocialaudityearreferredtothemostrecentyearforwhichauditedfinancialstate-mentswereavailable.Theresearchercompletedthefollowingsteps:•Visitedeachsiteandconductedaninterviewwithmanagementandseniorstaff•Interviewedasmallselectionofstakeholders•Reviewedagencydocuments,includingauditedfinancialstate-ments,annualreports,contractswithfundersandothersourcesoffinances,programreports,andevaluations•Assessedtheexternalandinternalfactorsaffectingoperations•Determinedtheresultsoftheprogram,thatis,outputs(directeffectsonclients),outcomes(indirecteffectsonclients),andsideeffects(effectsonthoseotherthanclients)•Assignedacomparativeeconomicvalue(estimatedmarketvalue)totheresults•Assessedincomingandoutgoingsocialandfinancialresources,comparedthem,andcalculatedasocialreturn-on-investmentratio•Issuedadraftreportforinputfromstakeholders•Issuedafinalreportforuseattheorganization’sannualgeneralmeetingInanattempttoassessthesocialvaluegeneratedbythesenon-profits,thesocialaccountingmodelusedintheprojectcombinesafinancialauditapproach(CanadianInstituteforCharteredAccoun-tants,1993)withafourth-generationevaluationperspective(GubaandLincoln,1989).Fourth-generationevaluation,operatingina 82QUARTER,RICHMONDconstructivistparadigm,negotiatesthetermsoftheevaluationwiththekeystakeholdersoftheorganizationandusesrigorousmethodsofinquiry.FindingsAtthefivesites,88stakeholderswereinterviewed;47hadgraduatedfromtheprojects.Thetotalnumberofgraduatesfromthefivesiteswhowereemployedatthetimeoftheresearchwas401,andthetotalamountthattheirwagescontributedtotheeconomiesoftheircom-Thestudymunitieswasalmost$7million.Graduateswhowentontootherconcludedthatschoolprogramsortraining(consideredasuccessfuloutcomebythethesocialrate-of-funder)totaled924,foranestimatedmarketvalue(basedonthegoingrateforcommunity-basedtraining)ofalmost$4million.Moniessavedreturnonbycommunitieswhengraduatesnolongerrequiredincomeassistanceinvestmentforwereassessedatavalueof$1.5millionforallfivesites.Therewerethefivesiteswasadditionalsmalleroutcomesforwhichthevaluewasalsoestimated.Forallfivesites,thetotalincomingfinancialandsocialresourcesalmost4to1—(includinganestimatedvalueforvolunteeractivities)wasassessedatforeverydollar$5.5million,andthetotaloutgoingresourcesreturningtothecom-ofvalueinvested,munitiesinwhichthefivesiteswerelocatedwasestimatedtobeabout$20.5million.Thestudyconcludedthatthesocialrate-of-returnon$3.70insocialinvestmentforthefivesiteswasalmost4to1—foreverydollarofvaluewasvalueinvested,$3.70insocialvaluewasreturnedtothecommunity.returnedtotheThisprojectanditsfinalreportraisedanumberofwaysoflook-ingatthesocialandeconomicfunctionsofnonprofits(Richmond,community1998).Itcalledfornonprofitandacademicresearchpartnershipstofurtherdevelopsocialaccountingtoolsfornonprofitsandfor-profits.Thereportconcludedthat,inadditiontonewperspectives,thecon-structionofanewframeworkfornonprofitsocialaccountabilitywasrequired.SocialAccountabilityOrganizationswithasocialpurposeinallthreeeconomicsectorscanbenefitfromthefurtherdevelopmentofsocialaccountabilityframe-worksandtools.RepresentativesoftheCanadiannonprofitsectormetrecentlyinroundtablediscussionsledbytheBroadbentpanel.Thepanel’spurposewastoinvestigatehowtopromoteaccountabil-ityandgovernanceinthevoluntarysector.Itsfinalreportaddressedimportantstewardship,governance,legal,andaccountabilityissuesforCanadiannonprofits(PanelonAccountabilityandGovernanceintheVoluntarySector,1999).Amongitsrecommendationsisthatnonprofitsshoulddevelopsocialoutcomeindicatorsandassessmentsformeasuringtheirperformance.However,inthetraditionofsocialauditing,thereporttreatssocialindicatorsasseparatefromthefinan-cialaccounts;itdoesnotintegratethemintowhatwearecallingasocialaccountingframework. ACCOUNTINGFORSOCIALVALUEINNONPROFITSANDFOR-PROFITS83AsafurthersteptotheprocessbegunbytheBroadbentpanel,morediscussionaboutsocialaccountabilityandmoretoolstomeasureitacrossthesectorsarerequired.For-profitfirmswithstrongsocialmissionscouldalsobenefitfromconnectingfinancialwithsocialdatainordertoassesstheiroverallperformance.Privatesectorbusinesseswhosesocialpurposesarelessprimarybutwhoparticipateinphilanthropicactivitiescouldalsobenefitbymeasur-ingthesocialimpactoftheircharitableinvestments.Inaddition,organizationsthatscreeninvestmentsfromtheperspectiveofsocialperformancemightgainfrombroadeningthetraditionalaccountingstatementsandintegratingsocialvalues(see,forexample,MichaelJantziResearchAssociates,Inc.,1997).Aframeworkfornonprofitsocialaccountabilityshouldtakeintoaccountthedualnatureofnonprofitsassocialandeconomicentities—apointthatisemphasizedinthesocialeconomyframe-work(DefourneyandMonzon,1992;Quarter,1992;Snaith,1991).Nonprofitresearch,asitcurrentlyexists,hasjustbeguntoillustratetheimportanceofthesectorincreatingasocialinfrastructure(Rifkin,1996),butthereislittleinformationonitseconomicsignif-icanceorfunctioning.Nonprofitmanagersusinganddevelopingsocialaccountingtoolsmaybeabletoaddanimportantperspectivetodiscussionsonpublicpolicyaffectingthesectorand,moregenerally,civilsociety.Withtheirprivatesectorcounterpartsforwhomsocialoutcomesareimportant,nonprofitmanagersmayalsobeabletodemonstratetheconnectionsbetweensocialandeconomicviability.Perhapsinthegrayareasbetweenthesectors—onceaccountedforseparately—newideasaboutsocialresponsibilityinallsectorscantakeshape.Inconclusion,wesuggestthattheconceptofsocialvalue,asoperationalizedthroughsocialaccounting,canserveasalinkbetweenthenonprofitandfor-profitsectors.Accountingprocesseshavebeentoonarrowlyconceivedandhavetendedtoexcludethesocialproductsthataretheoutcomeofbothnonprofitsandfor-profits.Byassigningtheseproductsafinancialvalueandtherebyattemptingtoestimatetheirsocialvalue,itispossibletohaveatrueraccountingprocess.Thisdiscussionhaspresentedsocialvalueinapositivemanner,butitmayalsobeconceivedofinnegativetermsaswell.Forexample,whenafor-profitfirm(ornonprofitforthatmat-ter)laysoffemployees,theremaybeacosttosociety.Traditionalaccountingapproachesdonotcompletelyexcludesocialvariables;forexample,nonprofitsthattrainpeopleonthemarginsofthelaborforcearealsoviewedasacosttosociety.However,ingeneralonlyalimitednumberofvariablesareincludedinaccountingprocesses.Thenarrowsetofvariablesthatareincludedintypicalaccountingmodelsexcludesimportantdataandalsocreatesadichotomybetweenthetwosectorsthatmightnotbetotallyjustified.Wesug-gestthatthroughintroducingsocialvalueintoaccountingprocesses,itispossibletocreateabridgebetweennonprofitsandfor-profits,as 84QUARTER,RICHMONDwellasaprocessofaccountingforvaluethatcanbeappliedequallytononprofitsandfor-profits.JACKQUARTERisprofessorattheOntarioInstituteforStudiesinEducationoftheUniversityofToronto,specializinginthestudyofnonprofits,cooperatives,workplacedemocracy,andcommunitydevel-opment.Hiscurrentresearchisoncalculatingthevalueaddedofvolun-teercontributionsinnonprofits,thesocialinvestmentofunion-basedpensionfunds,andtheconversionofpublichousingtononmarketcooperatives.BETTYJANE(B.J.)RICHMONDisadjunctprofessorandresearchassociateattheOntarioInstituteforStudiesinEducationoftheUniversityofToronto.Forherdoctorateatthatinstitution,shedevelopedasocialauditmodeltoassessthesocialandeconomicimpactsofanonprofittrainingorganization,whichreceivedARNOVA’sOutstandingDissertationawardfor1999.Sheiscurrentlyaconsultanttononprofitsandcooperatives,andisworkingonaprojecttocalculatethevalueaddedofvolunteercon-tributionsinnonprofits.ReferencesCanadianInstituteforCharteredAccountants.AuditsofNonprofitOrganizations:AnAuditTechniquesStudy.CanadianInstituteforCharteredAccountants,1993.Cherny,J.,Gordon,A.R.,andHerson,R.J.K.Accounting—ASocialInstitution:AUnifiedTheoryfortheMeasurementoftheProfitandNonprofitSectors.NewYork:QuorumBooks,1992.Cleghorn,J.S.“TheWorkofJustice:TheQuestforMoralCommonGroundintheAuthorityRelationsofWork.”Unpublisheddoctoraldissertation,EmoryUniversity,1995.Dees,J.G.“EnterprisingNonprofits.”HarvardBusinessReview,Jan.-Feb.1998,pp.55–67.Defourney,J.,andMonzon,J.(eds.).ÉconomieSociale.Brussels:Cen-treInterdisciplinairedeRechercheetd’InformationsurlesEnter-prisesCollectives,1992.Guba,E.G.,andLincoln,Y.S.FourthGenerationEvaluation.Thou-sandOaks,Calif.:Sage,1989.Hirshhorn,R.“TheGovernanceofNonprofits.”InR.J.DanielsandR.Mork(eds.),CorporateDecision-MakinginCanada.Calgary:Uni-versityofCalgaryPress,1995.Lager,F.Ben&Jerry’s:TheInsideScoop.NewYork:Crown,1994.Lewis,J.S.PartnershipforAll.London:Kerr-Cross,1948.Lewis,J.S.FairerShares.London:Staples,1954.MetroCreditUnion.CreditUnionSocialAudits.Toronto:MetroCreditUnion,1997. 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